AOL Readies Internet Phone Service

SAN JOSE, Calif.—America Online Inc. will launch a voice-over-IP telephone service integrated with its instant messaging service to capitalize on burgeoning consumer interest in using the Internet as a low-cost phone service.

AOL CEO Jonathan Miller revealed his companys plans to get into the VOIP market Tuesday during his keynote address at the VON Spring 2005 conference here.

“AOL had decided that within the next month, [it] will launch an Internet phone product that will be a truly differentiated product, providing the quality and value and features that will lead toward a highly competitive offering and mass-market adoption,” Miller said Tuesday in announcing the new service.

The phone service will use the familiar AOL Instant Messenger interface as the dashboard for making phone calls through a variety of devices, including PCs, wireless handsets, desktop Internet phones, or even old analog phones, AOL officials said Tuesday.

AOL is convinced that if it is going to offer a VOIP service, “it should be integrated with that buddy list that they work with every day,” Miller said.

/zimages/2/28571.gifClick hereto read about AOL building Web and audio conferencing into AOL Instant Messenger.

More than 4,000 users have tested the new phone service over the past four months, said Jim Tobin, vice president and general manager of AOLs advanced voice services, based in Dulles, Va.

This testing has shown that customers will be comfortable with using the instant messaging interface to initiate calls, Miller said.

He said the new VOIP service will be “competitively priced,” but he declined to discuss pricing details in advance of a formal introduction due over the next month. News reports have said AOL will offer the VOIP service for a flat rate of $25 per month.

Miller also declined to comment when asked whether AOL would offer its VOIP service at a price comparable to its original $9.95 flat fee offering in the early 1990s. That fee, for dial-up Internet Access and e-mail service, induced millions of people to start exploring the Web.

“We dont want to get ahead of ourselves,” Miller said. But “we will be offering the service at different price points.”

AOL wants to make using VOIP phones as easy as using its Instant Messenger service. Customers have clearly shown that “they want ease of use that they expect from AOL products,” Miller said. “That means that no AOL products should come with any instruction kit.”

AOL plans to work with Broomfield, Colo.-based Level 3 Communications Inc. to provide the network infrastructure, access to E911 (Enhanced 911), and local phone number portability capabilities. It will work with Chelmsford, Mass.-based Sonus Networks Inc. to provide the call-switching services.

/zimages/2/28571.gifRead morehereabout Enhanced 911 making headway in the VOIP market.

The AOL VOIP service has been designed to be a fully regulatory compliant service that aims to provide the same quality and reliability as any other national phone service, Miller said.

AOL also will work with its corporate stablemate Time Warner Cable Inc., based in Stamford, Conn., on service package deals and marketing, Miller said.

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